* Alpha Bank grows Q2 profit to 59.4 mln euros
* NBG Q2 profit drops to 122 mln euros on weak trading gains (Adds National Bank results, background)
ATHENS, Aug 29 (Reuters) - Greek lenders National Bank and Alpha pressed ahead with their balance sheet repair in the second quarter, reducing their sour loans as the country’s economy recovers from a 10-year debt crisis.
Saddled with 80 billion euros ($89.15 billion) of non-performing loans, the legacy of a debt crisis that shrank the economy by a quarter, Greek banks have been shedding non-core assets and shrinking their branch networks as they reduce the pile.
Alpha Bank, the country’s fourth largest lender, cut its non-performing loans ratio to 32.7% of its book from 33% in the first quarter, in line with the average pace of previous quarters.
Higher fee and commission income helped the bank, which is 11% owned by Greece’s rescue fund HFSF, grow its net profit to 59.4 million euros from 27.5 million in the January to March period.
Greece’s second largest lender National (NBG) said its ratio of non-performing exposures, which include non-performing loans and other credit likely to turn bad, fell to 36.5% from 38.9% percent in March.
It reported lower net profit from continued operations of 122 million euros on the back of weaker trading gains.
Greek banks aim to cut their ratio of sour credit over total loans to below 20% by the end of 2021 from 45.2% at the end of the first quarter - an ambitious but crucial goal to enable them to finance the country’s economic recovery.
Greece emerged from the straitjacket of tight supervision under three bailouts in August last year. Earlier this week its new conservative government fully lifted remaining capital controls imposed since June 2015.
No longer facing restrictions on transferring money abroad, households and companies are likely to return cash held outside the banking system.
The economy’s return to growth has been coupled with a rise in private sector bank deposits, a sign of strengthening confidence.
From June 2015 to June this year, deposits increased by about 12% or 15 billion, supported by improving market sentiment, economic expansion and rising employment.
Greece’s economy, which expanded at an annual 1.3% pace in the first quarter, is seen growing by 2.2% this year and by 2.5% in 2020, according to ratings agency Moody’s.
“We are witnessing a significant improvement in the economic outlook, evidenced by the sharp decline in Greek government bond yields,” Alpha’s Chief Executive Vassilis Psaltis said in a statement.
He said the lifting of capital controls is further step towards “full restoration of normality” as Alpha focuses on executing its bad loan reduction plan. ($1 = 0.8973 euros) (Reporting by George Georgiopoulos; Editing by Jan Harvey)
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